FCC Chief Presents Plan for Early Termination Fee

By Raoul Railey
19:05, June 15th 2008
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FCC Chief Presents Plan for Early Termination Fee

Kevin Martin, the chairman of the Federal Communications Commission, has announced a plan that will regulate the early termination fees that wireless carriers charge their subscribers when they want to give up a contract.

Over the last few years there have been numerous complaints from people who have been charged fees amounting from $150 to $200 when they announced their mobile phone providers that they wanted to cancel their contracts with them. Advocacy groups think that this sort of policy forces people into keeping a contract with a company they would normally leave.

If Martin’s plan will be adopted, people will still have to pay an early termination fee, but this time its value will vary depending on the price of the phone that has been bought by the subscriber when he or she closed the contract with the carrier. What is more, the longer the subscriber will remain in the network, the less he should pay when he chooses to change the wireless carrier.

The plan is a step forward in protecting subscribers from deals that would not benefit them, but there is the perception that there is more that can be done. Analysts think that cell phone providers might even fare better if they drop the fee, given the fact that this industry has seen some of the largest numbers of consumer complaints, many of them regarding their early termination policy.

While companies state that the early termination fees are necessary in order for them to be able to subsidize the cost of the phones they offer and to cover the cost of signing in new customers to their services, analysts estimate that these values combined amount are under $50 compared to the $150 they charge.





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